Green Business Model Innovation

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Nordic iNNovatioN report 2012:18 // october 2012

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Authors:

Kristian Henriksen, Markus Bjerre, Jakob Øster, Tanja Bisgaard

October 2012

Nordic Innovation Publication 2012:18

Green Business Model Innovation

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This publication includes material protected under copyright law, the copyright for which is held by Nordic Innovation or a third party. Material contained here may not be used for commercial purposes. The contents are the opinion of the writers concerned and do not represent the official Nordic Innovation position. Nordic Innovation bears no responsibility for any possible damage arising from the use of this material. The original source must be mentioned when quoting from this publication.

this publication includes material protected under copyright law, the copyright for which is held by Nordic innovation or a third party. Material contained here may not be used for commercial purposes. the contents are the opinion of the writers concerned and do not represent the official Nordic innovation position. Nordic innovation bears no responsibility for any possible damage arising from the use of this material. the original source must be mentioned when quoting from this publication.

This publication can be downloaded free of charge as a pdf-file from

www.nordicinnovation.org/publications.

Other Nordic Innovation publications are also freely available at the same web address. Author(s):

Kristian Henriksen, Markus Bjerre, Jakob Øster, Tanja Bisgaard Publisher

Nordic Innovation, Stensberggata 25, NO-0170 Oslo, Norway Phone: (+47) 22 61 44 00. Fax: (+47) 22 55 65 56.

E-mail: info@nordicinnovation.org www.nordicinnovation.org

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Project participants

Denmark

Ministry of Business and Growth

Kristian Henriksen

Special advisor and project owner

Markus Bjerre

Head of section

Danish Business Authority

Jakob Øster

Head of section

Alexandra-Maria Almasi

Research Assistant

Emil Damgaard Grann

Research Assistant

Novitas Innovation on behalf of Danish Business Authority

Tanja Bisgaard

Project manager

Hoegenhaven Consulting on behalf of Danish Business Authority

Casper Høgenhaven

Consultant

COWI on behalf of

Danish Business Authority

Henrik Sand

Project Manager

Finland

TEKES

Tuomo Suortti

Senior Technology Advisor

Iceland

Innovation Centre Iceland

Karl Friðriksson Managing Director Norway Innovation Norway Tor Mühlbradt Special Advisor Sweden VINNOVA Lars Wärngård

Director Manufacturing and Working Life Division

Ulf Holmgren

Head of Manufacturing and Working Life Division

Linköping University on behalf of VINNOVA

Mattias Lindahl

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Executive Summary . . . . 8

Preface . . . . 16

1 . Introduction . . . . 18

1.1 Aim and focus of the policy report . . . 19

1.2 How to read the report . . . .20

2 . Methodology . . . . 21

2.1 Delimitation . . . 21

2.2 Conceptualising Green Business Model Innovation . . . 22

2.2.1 Incentive models . . . 22

2.2.2 Life-cycle models . . . 23

3 . Policies for Green Business Model Innovation . . . . 25

3.1 Policies for specific green business models . . . 25

3.2 Functional sales . . . 26

3.2.1 Barriers .. . . 26

3.2.2 Existing policies . . . 27

3.3 Energy Saving Companies (ESCO) . . . 27

3.3.1 Barriers . . . .28

3.3.2 Existing policies . . . .28

Federal Energy Management Program - FEMP (US) . . . .29

ESCO-Light (DK). . . .29

The Green Deal (UK) . . . .30

Decoupling Policy California (US) . . . .30

3.4 Chemical Management Services (CMS) . . . 31

3.4.1 Barriers . . . 32

Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH). . . .32

3.5 Design, Build, Finance, Operate (DBFO) . . . 33

3.5.1 Barriers . . . 34

3.5.2 Existing policy . . . 34

The Private Finance Initiative (PFI), UK . . . .34

3.6 Green Supply Chain Management (GSCM) . . . 35

3.6.1 Barriers .. . . 36

3.6.2 Existing policy . . . 36

3.7 Take back management . . . 36

3.7.1 Barriers .. . . 37

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Executive Summary

Companies are increasingly recognising that sustainability can be a source of innovation that can help them become more competitive by either developing new products and services based on new technology (i.e. greentech and cleantech) or by making changes to their business models. These changes are here referred to as companies’ green business model innovation. Companies might in-novate by substituting to greener inputs, reusing or recycling resources, offering their product as a service function while continuing to have ownership of the products, or by developing greener products, services and processes.

When considering the role of policy for green business model innovation, policy makers need to consider whether their emergence and the related innovation should be left to the market or whether policies are needed to support it and what should such policies look like. The rationale for policy intervention lies in market failure related to the negative externalities of climate change and other environmental challenges leading to under-investments in eco-innovation and green business model innovation. Furthermore, there might be systemic failures hindering the flow of technology and knowledge, and

reducing the efficiency of the innovation efforts1_.

This report focuses on identifying policy initiatives that contribute to promoting the use of green business model innovation and the direct effects that policy has on enabling companies to imple-ment it. By uncovering barriers to implementing green business model innovation and creating an overview of some of the existing policies and their effect, the work aims to suggest and develop new policy initiatives that can promote green business model innovation in the Nordic region.

The greening of businesses is structured with respect to two main categories of elements in compa-nies’ business models: the incentive models and the life-cycle models.

• Incentive models: companies create incentives for customers and themselves to use

re-sources more efficiently by e.g. offering a service where the pay is linked to the usage of a product, rather than the product itself. The company is incentivised to

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expand the life of the product through good care, while the customer pays less the less is used. The incentive models identified are Functional sales (FS), Energy Saving Companies (ESCO), Chemical Management Systems (CMS), and Design, Build, Finance, Operate (DBFO).

• Life-cycle models: companies focus on greening their value chain, in parts or

throughout the entire value chain. Companies improve resource use, design products so they can be taken back and reused or recycled, or develop products that are not harmful to the environment and customers’ health. The life-cycle models identified are Green Supply Chain Management (GSCM), Take Back Management (TBM), Cradle to Cradle (C2C), and Industrial Symbiosis (IS).

These eight elements of business models are ceteris paribus perceived to have a more positive im-pact on the environment than “business as usual” practices in businesses, as well as to have the possibility to have a positive impact on the company’s earnings. These elements often have an em-phasis on non-technological innovations, or the technology is an enabler of the innovation rather than the driver of the innovation, which is the case for greentech and cleantech companies. This list of elements to green business model innovation is most likely not a complete list, but has formed the basis and focus area of the research.

Policies for Green Business Model Innovation

Some countries have developed and implemented policies targeting specific green business model innovation. They do not seem to form part of national or more overall strategies with respect to green business model innovation, but have the characteristic of being single standing policies in the countries that have implemented them. Policies that directly impact one of the eight elements of green business model innovation have been identified and included in this study. The following table gives an overview of the policies identified:

Business Model Element Existing policy Incentive models

Functional sales (Fs) No policies identified

energy saving companies (esco)

Federal energy Management program, us Green deal, uK

esco light, dK

decoupling policy california, us chemical Management

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Business Model Element Existing policy

design, build, Finance, operate

(dbFo) private Finance initiative, uK

life-cycle models Green supply chain

Management (GscM) No policies identified

take back Management (tbM) directive on Waste electrical and electronic _{equipment, eu}

cradle to cradle (c2c) cradle to cradle network, euNational Waste Management plan, Nl

industrial symbiosis (is)

industrial symbiosis Kalundborg, dK National industrial symbiosis program, uK Kwinana synergies project, australia

When looking at the two main categories of elements for green business model innovation, it was possible to identify at least one policy initiative for the three specific incentive models, but none for the more generic functional sales model.

The ESCO business model seems to be the single functional sales model that has achieved most at-tention from policy makers so far. The results from the FEMP in the US are encouraging, speaking for implementing similar policy initiatives in other countries. The CMS business model is promoted in Europe through a European-wide policy initiative REACH. However, if the goal is to eliminate toxic chemicals from industry, additional policy has to be devel-oped and implemented in order to create the right incentives for companies to change their way of doing business.

The DBFO business model has been promoted in the UK. While there have been some controversies related to the price of private finance versus public finance, it still seems like a policy that could foster sustainable projects through public private partnerships in a time of financial crises and the need for sustainable growth.

When it comes to policies for the life-cycle models, policy initiatives were identified for three of the four main categories of models.

TBM is in its early days of being promoted through EU policy focusing on recycling and reuse of electrical and electronic equipment. While this is an important first step that encourages producers and consumers to consider what happens to obsolete equipment, policy could be developed to broaden the scope of take-back of products to other industries.

C2C is mainly promoted through policies that focus on waste prevention. There seems to be a gap when it comes to areas such as developing materials and designing products

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that can be reused and recycled or which can be used as compost. There also seems to be a lack of policy to promote new “infrastructures” that can enable the collection of used materials in order to bring them back into the manufacturing processes.

IS is promoted through policy in a range of countries. We have described three countries that have created specific policies in different ways to promote IS. However, these policies all have the same main ingredients – they facilitate the meeting between different companies, identify relevant syn-ergies and provide the necessary skills and competencies for analysing the by-products that can be utilised.

On a more general level, there do not seem to be countries that strategically have implemented pol-icy initiatives that promote Green Business Model Innovation. The only relevant policy initiative we have been able to identify is the Business Innovation Fund from Denmark, which has been inspired by the early work of this project.

The pilot programme seeks to transform companies business models through green business model innovation by putting them through two stages. In the first stage the companies potential is identi-fied and a business case is made before going on the second stage where the companies receive guidance and coaching in how to transform the business models.

Policy recommendations to promote GBMI in the Nordic

region

Policy makers’ greatest challenge is to ensure that the policies they develop and implement will re-sult in the desired effects. In an increasingly global world, the challenge becomes even greater since national policies cannot always stand alone, but will have to interlink with policies in other coun-tries and regions. Companies can elude local policies by moving their business to alternative geographical locations. This is why it makes sense for the Nordic region to look at policy making in a broader perspective than only national governments. On a global scale, the Nordic countries and their home markets are small. Successful Nordic companies operate in several of the Nordic countries and in many instances also become global players. Policy should assist in this development by implementing regulation that is as widespread as possible, instead of creating local policies that make it hard to compete globally. In order to be able to create future global players in the areas of green growth, the Nordic countries have the opportunity to join forces and create a common platform backed by Nordic regional policy, which also can become a driving force behind broader policy on an EU and global level.

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should be addressed to. Based on the case interviews completed during this study, it was found that the compa-nies that have taken on green business model innovation are

mainly larger companies2_{. While there are cases of innovative small companies, it still}

seems like the focus of new policy should have a particular focus on assisting SME’s in making the necessary transformations of their business models.

Policy recommendations to promote incentive models

While there is a positive transformation being undertaken in the business community towards more sustainable business models, it is also a journey that can be met with a range of different challenges. Some of the barriers related to transforming a company’s business model to an incentive model are large investments that are tied up in products, long payback time for customers and lack of flexibility in the contracts, uncertainty about savings achieved by customers, traditional mindset among customers and employees, and difficulties in involving other companies in the value-chain.

In order to overcome these key barriers, the following policy recommendations have been devel-oped to promote the use of incentive models:

• Encourage an efficient public sector: Develop selection criteria for the public sector

to pro-cure ESCO, DBFO and functional sales solutions when new investments are made or when renovating and operating e.g. public buildings and roads. The selection criteria could be linked to existing standards that ensure sustainability. The scope could also be broadened to include areas such as municipal car fleets, water management or waste management. Se-lection criteria could be harmonised across the Nordic countries to broaden the scope of bidders in public procurement.

• Increase flexibility in long-term contracts: Develop new types of flexible standard

contracts for CMS and DBFO business models to make customer less hesitant towards a long-term commitment. For example, if a house owner has refurbished his house under the Green Deal in the UK, the improvements are tied to the property, not the owner of the property. When the house owner sells his house, it will be the new owner that takes over the bill and thereby also the contract and payments.

• Standards: Ensure that relevant sustainability standards are used for services and

processes in all industries where standards have been developed. Standards could be developed for e.g. ESCO contracts that make it possible for customers to evaluate which ESCO agreement gives them best value for money.

• Nordic financial rating scheme: Create a framework to establish a Nordic rating

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agency that can cooperate with banks, pension funds and other relevant investors in the Nordic countries to be able to evaluate different types of green business model innovation. The agency should be a private company allowed to operate under the licence from government. Inves-tors could work together with national guarantee funds and venture capitalists to broaden the scope of funding.

Policy recommendations to promote life cycle models

Companies transforming their business models into incentive models, also meet a series of chal-lenges. Some of the most important barriers are large investments in machinery and infrastructure systems, unwillingness among partnering companies and suppliers to share information on chemi-cals and materials, redesign of products and processes to enable the use of new materials, and lack of competencies and knowledge in companies and public authorities.

In order to overcome these key barriers, the following policy recommendations have been devel-oped to promote the use of life cycle models:

• Green Public Procurement: Develop selection criteria based on existing certifications

to be used in public tenders. Furthermore, the public sector can develop criteria for procuring re-cycled materials, as well as demanding design for recycling, where products are designed in order to be separated to allow materials to be reused and recycled. The public sector can also develop criteria for the resource cycles of companies participating in public tenders. Green public private partnerships can be developed on innovation platforms where prob-lems that need to be solved in the public sector are identified.

• Infrastructure for recycling: Promote and develop systems and infrastructures that

can en-courage the reuse and recycling of obsolete products and materials, as well as infrastructure to handle decomposing of biological materials such as bio-plastics. Encouraging companies to take back their obsolete and old products in order to create materials that can be reused in their own production or sold in the marketplace to other companies. Regulation can also be developed that requires companies to identify uses for their waste and by-products. Nordic systems should be developed to ensure benefits for all companies in the region.

• Standards: Ensure that relevant sustainability standards are used for products

and processes in all industries where standards have been developed. The Nordic countries have already developed the Nordic Ecolabel that is a voluntary eco-labelling scheme that evaluates a product’s impact on the environment. This could be expanded to cover more products and industries. For example, in the building

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sector standards such as BREAM, LEED and DGNB have been developed to ensure sustainable buildings. The public sector could set these standards as selection criterion in all areas of public procurement. Furthermore, a new type of standard could be developed with inspiration from the US that tells consumers how their products can be recycled, i.e. plastic, metal, paper or organic.

• R&D of new materials and chemicals, and access to information: Support business

develop-ment with focus on R&D of new materials and chemicals in order to enable new design and processes, for example in partnerships with universities. In addition, provide access to in-formation of new methods in production and the use of new materials and chemicals.

Implementing policies for green business model

innovation

For the policies to be implemented successfully in the Nordic countries, it will be necessary to un-cover whether there are current or up-coming strategies or initiatives in each of the countries where the above recommendations would fit, and whether the policy recommendations can be im-plemented in the current frameworks. Existing relevant green innovation funding programs could include or have a strategic focus on the life cycle and incentive models such as ESCOs or C2C. These programs could for example be in line with the pilot project of the Danish Business Innovation Fund and focus on SMEs, or in relation to export guarantees.

In addition, more general policies to promote green business model innovation could be imple-mented in some of these existing programmes as suggested below:

• Networks and partnerships: Create business model specific networks for each type

of busi-ness model, in each of the Nordic countries as well as regionally through regional Nordic networks. One focus area could be on creating partnerships between functional sales or ESCO companies and financial institutions that are willing to invest in products that are tied up over long periods while their service is offered to customers. Another focus area could be on supporting industrial symbiosis initiatives at Nordic level to drive down search costs for potential companies. Yet another focus area could be on developing new skills and com-petencies in the area of design thinking and systems thinking by experimenting with new types of work teams.

• Showcases, demonstration projects and dissemination: The Nordic countries are often

con-sidered as a market with customer that demand a more sustainable way of living and have been chosen by companies as test markets for new concepts and products

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(e.g. Better Place’s electrical vehicles). Focus could be on showcasing in certain industries such as building C2C neighbourhoods, or the public sector can develop projects via intelligent public procurement that can be showcased. Efforts should also be put on dissemination of green business model innovation by e.g. educating business advisors in public and private agencies.

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Preface

This policy report is one of four reports in the work related to Green Business Model Innovation completed for the organisation Nordic Innovation. The other reports in this series are Green Business Model Innovation Conceptualization Report, Empirical studies

of Green Business Model Innovation and a Synthesis report of Green Business Model Innovation. The work builds on the report Green Business Models in the Nordic Region – A key to promote sustainable growth3_.

The work behind this report has been made possible thanks to funding from Nordic Innovation and the others partners on the project; The Danish Business Authority, VINNOVA, TEKES, Innovation Norway and Innovation Centre Iceland. The Nordic working group which has undertaken the work of this project has representatives of the Nordic innovation agencies and experts working with framework conditions, performance and funding green growth.

The Danish Business Authority, has been the project lead, and the team behind the policy report at The Danish Business Authority consisted of: Jakob Øster, Head of section, Kristian Henriksen, Special Advisor, Markus Bjerre, Head of section, Alexandra-Maria Almasi, research assistant, and Emil Damgaard, research assistant. In addition Tanja Bisgaard from Novitas Innovation has participated in the final stages of the work and the making of the report.

We would also like to thank the group of experts whom have been interviewed and participated in workshops and discussions, and provided us with valuable feedback: Andrea Beltramello, Policy Analyst, Directorate for Science, Technology & Industry, OECD

Arnold Tukker, Professor Sustainable Innovation, NTNU, Norway, and Program Manager Sustainable Innovation, TNO, The Netherlands

Dax Lovegrove, Head of Business and Industry, WWF, UK

Dirk Pilat, Head of Science and Technology Policy Division, Directorate for Science, Technology & Industry, OECD

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preFace

Hanne Juel, Innovation Manager, Central Region of Denmark

Martin Andersen, Head of Office, Kalundborg EU-Office, Belgium/Denmark Mette Skovbjerg, Projet Advisor, Symbiosis Centre, Denmark

Peter Laybourn, Chief Executive, International Synergies Ltd and NISP, UK

Robbert Droop, Policy Coordinator, Ministry of Infrastructure and Environment, The Netherlands

Søren Lyngsgaard, Creative Director, Cradle to Cradle Denmark Tomoo Machiba, Senior Programme Officer, IRENA, UAE

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1. Introduction

It is a well-established fact that innovation is essential for a sustainable long-term growth path for any country. It has also become widely accepted that resource scarcity, environmental and climate issues need to be addressed at government, business and consumer level if we are to retain our standards of living and create long-term growth for emerging economies.

Businesses are also increasingly recognising that the greening of their own business or value chain by improving resource productivity may increase both their short-term and long-term competitiveness and may create new markets. Some businesses innovate by improving their resource productivity by substituting to greener inputs, selling greener products and services, while others implement life cycle elements in their business model or apply functional sales systems (or Product Service Systems, PSS) that may change consumption patterns and practices throughout the entire value chain.

In order for policy makers to contribute to the positive development in the business community and develop policy that fosters sustainable business, it is necessary to understand how companies make these transformations of their business models and what barriers they encounter. An in-depth review of the elements of green business model innovation is presented in the report Green Business Model Innovation:

Conceptualization Report. Furthermore, experiences and insights from the 41 business

case studies as well as input from experts are drawn upon in the discussion and development of policy suggestions. The findings of this report are integrated with the findings of the entire project in a synthesis report.

When considering the role of policy for green business model innovation, policy makers need to consider whether their emergence and the related innovation can be left to the market or whether policies are needed to support it and what should such policies look like. The rational for policy intervention lies in market failure related to the negative externalities of climate change and other environmental challenges leading to under-investments in eco-innovation and green business model innovation. Furthermore, there might be systemic failures hindering the flow of technology and knowledge, and

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iNtroductioN

reducing the efficiency of the innovation efforts4_.

In the green paper “Green Business Models in the Nordic Region” by the Nordic Council of Ministers (FORA 2010) it is concluded that the Nordic region has a great and untapped potential for Green Business Model Innovation. The green paper points to the demands for more in-depth knowledge and awareness regarding the benefits and effects of Green Business Model Innovation and for supporting policies and regulation to promote Green Business Model Innovation. Moreover, companies call for practical tools, which can help them implement Green Business Model Innovation.

This Nordic project addresses the above fundamental challenges and strengthen international network relations with organisations such as the OECD, Nordic and international frontrunner companies, policy makers, industry organisations and experts.

1.1 Aim and focus of the policy report

This report focuses on identifying policy initiatives that contribute to promoting the use of green business model innovation that holds the potential to transform companies’ business models into greener ones. We have identified policies that have a direct effect on the eight elements of green business model innovation. By uncovering barriers to implementing green business model innovation and creating an overview of existing policies and their effect, our work aims to identify existing and new policy initiatives that can promote green business model innovation in the Nordic region.

The Nordic Council of Ministers and Nordic Innovation have recently focused on green business model innovation, and this policy report is a contribution to strengthening the knowledge in this area and contributes to the vision of how to continue to make the Nordic region the ‘Green Valley of Europe’. This entire project’s findings will be discussed at a meeting for the Nordic Council of Ministers in late 2012, but it can also serve as inspiration for countries and policymakers that would like to explore this area further.

The aim of the Nordic project Green Business Model Innovation is to develop and anchor policies in the Nordic countries to support the framework conditions of Green Business Model Innovation for Nordic companies. The ambition is to encourage Nordic companies to make use of Green Business Model Innovation by disseminating information on how they work and how they benefit existing companies. Focus is placed on creating awareness among Nordic policy makers on what barriers must be overcome to spur green business model innovation and how policy initiatives can play a role in overcoming some of these barriers. The policy report presents recommendations

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for new feasible policies for Nordic policy makers inspired by policies implemented in countries around the world.

The work is relevant for companies wanting to transform the way they do business to “greener” ones, as well as for academics and scholars interested in inspiration on how to create green growth through policy interventions.

1.2 How to read the report

A brief first chapter introduces the concept of green business model innovation, but for a complete view of this see the conceptualization report. The next section takes a look at selected policies targeted the different types of business models we describe. Each of the eight identified elements of green business model innovation are briefly described and existing policies are descried where we have identified some. Finally we take a look at the barriers experienced by companies and how policy can participate in overcoming the barriers. Based on this understanding and the existing policies, new policy suggestions for the Nordic region are proposed.

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MethodoloGy

2. Methodology

The policy report has drawn on desk research carried out to uncover policy recommendations from international organisations like the OECD, the EU, and the Nordic Council of Ministers. Reports from private consultancies containing policy recommendations have also been uncovered. Furthermore, inputs from the 41 business case studies conducted during the project also contribute to the development of policy recommendations.

Inputs from the policy workshop held in 2010 as part of the Green Paper is part of the first contribution to the list of policy recommendations and is supplemented by desk research that has been carried out to uncover existing national and regional policies that support and disseminate the use of green business models. Moreover, the joint workshop together with the OECD, the European Commission and Nordic Innovation in January 2012 has also led to many useful insights on the policy side.

2.1 Delimitation

There are several ways to promote green growth and eco-innovation. There is a lot of focus on developing new technologies that can help solve the global challenges related to climate change and resource scarcity. New industries are emerging where cleantech and greentech companies offer solutions to save resources, create energy from renewable resources or drive fuel-efficient cars. And the list of solutions keeps getting longer. However, companies do not necessarily have to develop new technologies in order to become greener and participate in solving the global challenges. Many companies can change the way they do business, and thereby participate in having a positive effect on the environment as well as ensuring a competitive company. In this study we have chosen to limit the type of policies we examine, to the ones that have an effect on transforming companies’ business models into green ones and we have specifically focused on non-technological innovation.

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2.2 Conceptualising Green Business Model Innovation

In the literature, there has so far not been established an internationally acknowledged definition of green business models or green business model innovation, nor has there previously been any structured way of describing these concepts as a whole.

There are many terms in the public and academic debate about how companies green their business or how they are categorised as green companies. These terms are ranging from the more product and service oriented perspectives like cleantech companies that produce e.g. renewable energy such as wind and solar power, resource efficient products such as energy efficient pumps, environmental services and so on, to companies that implement more process oriented initiatives in their businesses or value chain such as environmental ISO-standards, cradle-to-cradle, Corporate Social Responsibility (CSR) or

green reporting5_.

We structure the greening of businesses with respect to two main models: the incentive

models and the life-cycle models.

We have identified eight elements of green business model innovation, where the way business is done has a more positive impact on the environment than “business as usual”, as well as the company’s earnings. This is most likely not a complete list, but has formed the basis for our research. Some companies have started up using a green business model while other companies have changed the way they do business, thereby transforming their business model into a green one.

2.2.1 Incentive models

A particular way to green ones value chain is to create incentives for customers to use resources more efficiently. Examples of such models are functional sales where the manufacturer offers the service of his product to customers who pay according to usage for the product, rather than the product itself. The ownership of the product stays with the manufacturer, giving him incentives to design, manufacture and operate the product, so that it minimises the use of energy, resources, requires minimal maintenance which in addition have a positive effect on the bottom line. See table 1 for a short introduction of the incentive models.

5 For a more in-depth description of green business model innovation see the project report ”Green business Model innovation: conceptualization report”

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MethodoloGy

Table 1. Incentive models

Functional Sales (FS)

Functional sales (also called product service systems, pss) enables the customer to pay for the functionality or result of the product as a service instead of buying the product itself, e.g. leasing or product sharing.

Energy Saving Company (ESCO)

an esco provider optimises customers’ operations in e.g. buildings and in return gets paid according to the savings achieved. the customer does not have to pay up front and pay less the less is used of the service.

Chemical Management Service (CMS)

chemical management services is a business model based on a long-term contract, where the supplier of cMs accepts the responsibility for manag-ing chemicals of its customers and strives to reduce the associated costs and risks.

Design, Build, Finance, Oper-ate (DBFO)

design, build, Finance, operate companies undertake capital intensive long-term construction projects where private finance, construction, service and/or maintenance are bundled into a long-term contract of typically 20-30 years.

2.2.2 Life-cycle models

There are many different ways of greening a company’s value chain, and also companies may focus on smaller or larger parts of the value chain ranging from fully implemented cradle-to-cradle to more or less implemented green supply chain management, take-back arrangements, life-cycle thinking etc. In between there are a many different ways of greening ones value chain. One example is the industrial symbiosis model (industrial ecology) that centres closely around neighbour companies’ surplus input/output resources and utilising these in the most optimal way across the companies in the industrial symbiosis. See table 2 for a short introduction of the life cycle models.

Table 2. Life cycle models

Green Supply Chain Manage-ment (GSCM)

Green supply chain Management is an integrated concept of greening activities in the supply chain focusing on upstream flow, cost reductions of and innovation in raw materials, components, products and services6_.

Take back man-agement (TBM)

take back management extends the producers

responsibility of waste management through take back mechanisms of the down-stream use of the product. this includes manufacturers, retailers, consumers and recyclers7_.

6 http://www.effektivitet.dk/~/media/858769eccd3a45e1ba7d59b5dd06246e.ashx

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Cradle-to-cradle (C2C)

cradle-to-cradle designs innovative and essentially waste free products that can be integrated in fully recyclable loops or biodegradable processes. cradle-to-cradle focuses both up-stream and down-stream in the value chain8 9_.

Industrial Symbiosis (IS)

industrial symbiosis is a shared utilization of resources and by-products among industrial actors on a

commercial basis through inter-firm recycling linkages. the aim of industrial symbioses is to reduce costs and environmental impact of participating companies and municipalities.

8 Kelly, 2010

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policies For GreeN busiNess Model iNNovatioN

3. Policies for Green Business

Model Innovation

Our focus is on identifying policies that directly promote the use and dissemination of green business model innovation. While there also are “indirect” policies such as landfill tax, carbon tax and so on that play an important role in creating more sustainable behaviour amongst companies and consumers, we have chosen not to include these types of policies in this report. For a short overview of each of the Nordic country’s green growth strategies, see appendix I.

3.1 Policies for specific green business models

Some countries that have developed policies targeting specific green business model innovation. We have identified the ones we believe directly impact one of the eight elements of green business model innovation we have chosen to include in our study. In the following we briefly describe each of the eight elements, and present a short company case within each of the eight categories. We give an overview of some generic barriers to implementing the green business model, but it is important to keep in mind that many of these conditions will vary from country to country as well as depending on industry.

We also present an overview of the existing policies we have found to promote each element of business model and which will help encourage companies to transform their business into a greener one. In many of the policy cases we have been able to uncover evaluations of the effect of the policy. However, these evaluations are mainly focused on outputs and positive outcomes, and information related to costs and investments have not been possible to identify. This makes it difficult to fully evaluate the effects of the implemented policies, never the less, we hope the information will still prove useful in demonstrating what can be achieved through policy.

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3.2 Functional sales

Functional Sales (also called Product Service Systems, PSS) is a generic business model

that holds common characteris¬tics of all incentive models within the green business models. In functional sales the provider offers the customer to pay for the functionality or result of the product instead of buying the product itself. The structure of the business model gives the provider the incentives to optimize and maintain the product to ensure life cycle cost efficiency, which in turn reduces the environmental impact.

3.2.1 Barriers

There might be some initial hurdles related to convincing customers – private as well as business customers - that buying a service might be better than owning the product themselves, however there seems to be more barriers related to how a company organises itself internally and its corporate culture. Some of the barriers that have been mentioned are e.g. lack of integration between corporate divisions, separation of departments in companies between the financial bodies responsible for investments and the bodies responsible for operation, or lack of knowledge about benefits of the functional sales model.

When adopting a functional sales model, it will require including new actors in the value chain. New actors require training, and companies find it too time consuming or difficult to teach new actors what it takes to keep the customers happy.

Current accounting practices might also be a barrier for customers wanting to buy a service instead of a product. A customer that owns a product also has the products registered as assets in its accounts. However, buying a service instead will result in the company’s assets declining, and might lead to a fall in credit rating. Furthermore, it is a challenge to change from short-term profit realisation at the point-of-sale to longer time amortisation periods at the point-of-service. Offering products and their services

10 Fora, 2010

Case 1: VolVo aero

the swedish company volvo aero sells the service of well performing aircraft turbines (a flight hour agreement), instead of selling the engine itself. the customer pays per turbine spins in the air. volvo takes on the responsibility of the maintenance of the engine, providing highly skilled staff with specific knowledge of the engines functionality. this makes it unnecessary for the flight carrier to hire specialist engineers to maintain the engines. When volvo themselves maintain the engines, the result is an optimized performance of the engines leading to a reduction in fuel consumption. Flight carriers thereby save on costs for employees as well as fuel, in addition to emitting less co2 when using their

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will require large investments in the products that put strains on companies’ capital and cash-flow.

3.2.2 Existing policies

We have not found any existing policies that focus on promoting the use of functional sales at this general level. However, based on the barriers described, it would seem like a good idea to introduce policy frameworks that can promote functional sales on a broad scale. One of the reasons for the absence of policies in this area identified by Mont (2003) is due to the lack of using the principles of life cycle thinking. Environmental policy has historically been formulated in relation to specific categories such as air, water and land. In order to formulate policies related to functional sales (or product service systems, PSS) it is necessary to design policies where the environmental impact is considered across the entire life cycle of a product and thereby the entire value chain of the company offering the product.

We have found policy examples that are targeted specifically towards the incentive models Energy Saving Companies (ESCO), Chemical Management Services (CMS) and Design, Build, Finance, Operate (DBFO) that are described in the following.

3.3 Energy Saving Companies (ESCO)

The most widely disseminated green business model within the incentive models is Energy Saving Companies (ESCOs). The provider of ESCO solutions optimises companies’ operations and public buildings and in return gets paid according to the savings achieved. The customer does not have to pay up front. Most examples stem from energy savings in public sector buildings. One example could be to guarantee energy savings for industrial companies and get paid according to the energy savings achieved as a result of their installations. Customers pay less the less is used, and are compensated if savings are less than guaranteed.

11 Fora, 2010

Case 2: Danfoss solutions

the danish company danfoss solutions helps industrial companies in the food and beverage market reduce the amount of energy they use in their production processes and operations by e.g. installing more efficient pumps or installing controls on refrigeration temperatures or lighting or changing routines of employees. they guarantee their customers a saving with a return on investment of 2-4 years and are paid a percentage of the savings, while also reducing the

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There are also a few slightly different versions of ESCO such as MASCO and WASCO. A MASCO company specialises in material efficiency and makes the material saving investment in the customer company, while a WASCO company specialises in water efficiency and makes water usage saving investments in the customer company. Also in these models the companies are compensated on the basis of the cost savings they achieve for their customers. We have not been able to find any policy aimed at promoting the MASCO and WASCO business models specifically. However, we have found some research done on MASCO business models in TEKES in Finland which was a joint

research project including academics, industry as well as policy makers12_{, and where the}

aim of the project was to test several ways to use MASCO business models. 3.3.1 Barriers

ESCO suppliers will have to be able to make larger investments themselves, as they take over the investments and risks of their customers. These investments are often perceived more risky, as the customers’ behaviour and actions now will influence the ESCO provider. In addition, there will be an increase in competition for scarce capital compared to more traditional investments.

A lack of knowledge among customers in the private market, the public sector and in the business to business sector may hinder the demand of ESCO solutions. Customers are reluctant to invest in large upfront investments since they are uncertain of the potential savings, and are deterred by the long payback time of the investments as the period of time they own the property might be shorter than the expected payback time. Lack of trust in suppliers might also lead to reluctance to committing to long term ESCO contracts.

Three relevant policies to support and disseminate the use of ESCO agreements were uncovered:

• Federal Energy Management Program - FEMP (US)

• ESCO-Light (DK)

• The Green Deal (UK)

The Federal Energy Management Program in the US has existed since the beginning of the 1970s, while ESCO light is in its trial phase in Denmark, and the The Green Deal is to

be introduced in the UK later this year. They are described briefly below13_.

12 http://management.aalto.fi/en/research/groups/responsibility/research_projects/ 13 see annex a for more detailed information on the identified policies

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Federal Energy Management Program - FEMP (US)

This program was first introduced in 1973 at the time when the US was experiencing its first energy crisis. The 1973 oil price increases was estimated to have cost the US economy USD 350 billion. The FEMP was mandated to help federal agencies set the example in reducing energy use, energy costs, and emissions in public sector facilities. The FEMP provides alternative financing contract support, technical assistance and training, co-ordination of federal reporting and evaluation, and supports the introduction of advanced technologies into the federal vehicle fleet and other activities that assist federal agencies. The FEMP website provides a comprehensive range of information aimed at agency energy managers.

Effect

Concerning energy savings performance contracts (ESPCs) as of May 2011, more than 570 projects worth USD 3.9 billion were implemented at 25 federal agencies in 49 states and DC.

These projects saved an estimated:

• 32.8 trillion British thermal unit (Btu) annually; equivalent to the energy consumed

by 345 000 households or a city with a population of 893 000.

• USD 13.1 billion in energy costs 14

ESCO-Light (DK)

The focus of the ESCO Light initiative is to promote energy efficiency in private homes. An ESCO Light pilot project was initiated in Middelfart, resulting in savings equivalent to the energy consumption of 25 private houses were realised. To motivate the inhabitants

of the municipality, citizens received DKK 115_{pr kWh they saved during the pilot project.}

The ESCO Light evaluation helped the customer identify, plan and complete energy efficiency measures, making it easier for the customer to implement an energy efficiency solution. The ESCO Light initiative combines energy efficiency expertise, assistance in implementation of the measures, payback model and a guarantee that savings will be achieved.

The homeowner will have to pay for any work done up front. However, the energy efficiency measures that have been implemented in a house should be visible immediately by a reduced energy bill, giving the homeowner the benefit of the savings instantly. In addition to the savings attained on the energy bill, the homeowner will be

14 read more: http://www1.eere.energy.gov/femp/ 15 equivalent to approximately 13 eurocents

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able to receive DKK 0,24 pr kWh they save by participating in the ESCO Light initiative. 16

The Green Deal (UK)

The focus of the Green Bill is to reduce CO2 emissions in the UK, by reducing the energy consumption in people’s homes and in commercial buildings.

The Green Deal is focused on energy efficiency measures that meet the golden rule - the expected financial savings must be greater than the costs attached to the energy bill. The Green Deal offers the opportunity to repay the investments made in home energy improvements through energy bills, spreading the costs of the investment. There will be no upfront cost to the owner of the property. Furthermore the bill payer is only liable to make Green Deal payments whilst they are liable to pay the energy bill at the property. Once the property is taken over by another owner, the new owner will take on the Green Deal payments associated with the energy bill. Once the payments for the investments have been made, they will be taken off the energy bill.

Effect

The scheme is being implemented in full in 2012 and is expected to provide opportunities for skilled and unskilled labour – from assessment to installation, from manufacturing to supply – sustaining and creating jobs in the UK. The prediction is that 100,000 jobs

could be created throughout the supply chain within five years. 17

Decoupling Policy California (US)

California’s utility-sector customer energy efficiency programs date back to the 1970s and have grown and evolved substantially over three decades. Investor-owned utilities administer energy efficiency programs with oversight by the California Public Utilities Commission (CPUC), which establishes key policies and guidelines, sets program goals, and approves spending levels.

Decoupling is the separation of a utility’s profit from its sales of electricity as a commodity. Instead, a utility’s revenue is met by setting a revenue target, then electricity rates are

regularly fine-tuned to meet that target18_{. Utilities submit their revenue requirements}

and estimated sales to regulators. The CPUC sets the rates by regularly applying adjustments to ensure that utilities collect no more and no less than is necessary to run the business and provide a fair return to investors. Any excess revenue gets credited back to customers. Any shortfall gets recovered later from customers.

16 read more: www.ens.dk

17 read more: http://www.decc.gov.uk/en/content/cms/tackling/green_deal/green_deal.aspx

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Effect

California’s per capita energy has remained relatively flat over the last thirty years. In

perspective, energy use per capita in the rest of the country has surged by 50 percent19_.

3.4 Chemical Management Services (CMS)

The number and diversity of chemicals produced and used in society today are growing in conjunction with both the evident and uncertain environmental impacts associated with the life cycles of these chemicals. Chemical management services (CMS) is a business model based on a strategic, long-term contract, according to which the supplier of chemical management services accepts the responsibility for managing chemicals and strives to reduce the associated costs and risks. This strategy also has the potential for reducing the environmental impacts of chemicals.

The chemical provider and the chemical user have the common goal of reducing the costs and quantities of chemicals applied in the user’s processes. In traditional provider-buyer relations, the provider’s profits depend on the amount of products sold; the greater the quantity, the higher the profits. In CMS the provider’s profits depend on how well the function of the chemicals is delivered: the customer is interested in the final result— the number of cars painted, the period during which equipment is properly lubricated, the outcome of a cutting process in which cutting fluids are used, the cleanliness of the

machine parts cleaned by a solvent, and so forth. 20

19 www.cpuc.ca.gov

20 Mont et al, 2006

21 see project case studies for complete case description

Case 3: safeCHeM europe

the american company saFecheM, a subsidiary of the dow chemical

company, provides customers with a complete solvent cleaning solution service instead of selling chemical cleaning products. the service is based on a closed-loop system where solvents are delivered, used and taken back.

customers are invoiced monthly and the fee is based on product performance (e.g. chemicals used per m2) instead of per product used. saFecheM’s revenue now depends on the volume of e.g. cleaned metal instead of the volume of solvents sold.

saFecheM’s chemical leasing service has the potential to reduce solvent usage by 63 percent and waste by 95 percent. the full service model reduces environmental impact caused by photochemical oxidation, human toxicity and

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While the CMS model has been around in the US for 20 years, CMS activities in

Europe have been significantly lower. The increased regulatory focus on the industrial use of chemicals is expected to create an increased interest for the CMS concept on the European market.

3.4.1 Barriers

Customers are often reluctant to make agreements with CMS providers since the contracts are long-term making it difficult for the customers to switch to other suppliers. Furthermore, customers often lack trust in the CMS supplier and are unwilling to provide confidential process information.

The value of CMS lies in its ability to reduce total chemical costs. It is often difficult for firms to identify and link costs to chemical usage, making it hard to determine the total costs of chemical use, and thereby assess the benefits of a CMS program. The result is often that customers are reluctant to budget adequately to improve the environmental impact of the company.

CMS makes most sense when it is a large quantity of services that can be sold, making it more valuable for large companies. Variable production can also be a barrier to implementing CMS, as varying chemical usage makes it hard to determine appropriate CMS fees.

Contracting CMS is more complicated than selling/buying products, especially across European countries.

We have identified a policy initiative at European level called the Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH). It is described briefly below.

Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH)

REACH is the European Community Regulation on chemicals and their safe use, and was established in 2007. In 1981 there were more than 100.000 types of chemical substances that had been introduced to the European Community and that had not been tested. New regulation in 1981 demanded new chemical substances to be tested, resulting in 3.800 substances being registered and analysed. However, there were still over 100.000 chemical substances where there was a lack of sufficient information publicly available in order to assess and control them.

REACH was therefore implemented with the aims of improving protection of human health and the environment from the risks of chemicals. Any company that imports or manufactures products with chemical substances in, or chemical substances

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themselves, are obliged to report them to the REACH Agency, and ensure that there is relevant information available on hazards and how to handle the substances.

The Agency evaluates the chemical substances reported by companies, and chemicals of very high concern are made subject to authorisation and a list of the substances is published. Companies using these substances are monitored, and are required to constantly investigate whether there are less harmful chemicals that can be used as substitutes.2223

Effect

A survey sent to companies in 2012 found that 72 percent of companies thought it had led to an increase in access and scrutiny of information about chemical substances and 24 percent indicated that they had been able benefit from REACH through increased knowledge of substances and properties.

It was asserted that the registration process has had an impact on innovation, but the list of hazardous chemicals is currently creating the greatest deal of innovative activity. Authorisation and restriction, while important in specific sectors affected, are affecting a smaller part of the industry. It has not been able to discern overall unequivocal benefits for consumers, the market and society at this stage of implementation.

Highly innovative SMEs have a more negative view of the overall effect of REACH on

innovation than large firms for the present and the future24_.

3.5 Design, Build, Finance, Operate (DBFO)

Design, Build, Finance, Operate (DBFO) companies undertake capital intensive long-term construction projects where private finance, construction, service and/or maintenance are bundled into a long-term contract of typically 20-30 years, which allocates risks and responsibilities between the parties. In this business model long term contracts give incentives to improve the quality of the construction project so that the life-cycle costs are lowered.

22 http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm

23 ec, 2007

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3.5.1 Barriers

Customers are often not aware of the potential benefits a DBFO model can have, both financially and environmentally. Furthermore, there is a lack of documentation on the results of such contracts, making it hard to evaluate whether a DBFO model would make sense.

Customers are also concerned with a lack of flexibility due to long-term contracts, and uncertainty concerning the calculation of risk between the different parties involved. Public organisations deciding to go ahead with DBFO models are often deterred since the procurement process is often more complex and lead to additional transaction costs. Another barrier seen from the eyes of the public sector is that private finance which is raised to fund the DBFO projects, often are more expensive than raising public finance. But at the same time, finding public finance is often harder than finding private finance. DBFO thereby allows the public sector to renovate and build at a faster rate since the funding comes from private sources.

3.5.2 Existing policy

We identified an initiative in the UK that seeks to promote the use of the DBFO model. It

is described briefly below26_.

The Private Finance Initiative (PFI), UK

In 1992 the Private Finance Initiative (PFI) was introduced as a way of generating new

investment in public services without raising taxes27_{and to benefit from the private}

sector skills in management of projects and services traditionally undertaken by the

25 Fora, 2010

26 the danish competition and consumer authority and the municipalities have also for some years had a focus on dbFo and have helped with funding, networking, and guidance.

27 house of commons, 2001

Case 4: allfarVeg

allfarveg is a Norwegian company that was established to design, build, finance, operate and maintain the new road between lyngdal and Flekkefjord in Norway. the company has a 25-year contract with the Norwegian public roads administration, and has taken over many of the tasks that in previous road building projects have been the government’s responsibilities. allfarveg receives payment based on the performance of the road; whether it is safe to drive on, cleared for snow and so on. the incentive structure including the operation of the road lead allfarveg to e.g. use brighter stones in the asphalt requiring less light intensity to light up the road at dark. this has lead to a 30 pct reduction in electricity costs, and a savings in resources used for electricity. in addition the

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public sector. PFI differs from privatisation since the public sector retains a substantial role in the project, either as the main purchaser of the project or as an essential enabler of the project. It also differs from contracting out since the private sector provides the capital assets as well as the services. PFI contracts can be used in any public sector. Groups of private investors manage the Design, Build, Finance and Operation of public infrastructure based on specifications decided by public sector managers and their departments. Under the PFI, the public sector does not own the asset, such as a hospital or a school, but pays the PFI contractor a stream of revenue payments for the use of the facilities over the contract period. Once the contract has expired, the ownership of the asset either remains with the private sector contractor or is returned to the public sector, depending on the terms of the contract.

In total, 61 new PFI projects were being procured as of March 2011, with a total estimated investment value of 7 billions pounds. This is additional to over 600 billion pounds of

capital investments already committed by private investors under signed PFI contracts28_.

3.6 Green Supply Chain Management (GSCM)

Green Supply Chain Management is an integrated concept of greening activities in the supply chain focusing on upstream flow. Raw materials and components are sourced as sustainably as possible while toxic content is minimised and eliminated where possible. Demands are also placed on suppliers providing products and services to ensure they meet the requirements of environmentally sustainable behaviour. Many companies embarking on efforts to green their supply chain also discover alternative inputs that are more cost-efficient.

28 house of commons, 2011

Case 5: iKea iWaY

the swedish company iKea has large warehouses with all types of home furnishings, and a large number of suppliers globally. iKea has developed their own iKea Way on purchasing products, Materials and services – iWay – which is the iKea supplier code of conduct. iKea has systemised and formalised social and environmental standards, which are to be met in the sourcing of raw materials and core services throughout the entire company. this has resulted in e.g. reduced use of toxic chemicals and the introduction of more sustainable

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3.6.1 Barriers

Suppliers often lack relevant information on regulation and how to implement green supply chain best practice. A lack of tools for companies makes it hard to optimise the supply chain with environmental management.

Companies also experience a range of internal barriers such as a lack of financial and human resources to develop new products and processes, as well as a lack of awareness amongst both management and employees. Lack of resources is probably one of the most important barriers, since the resources have to compete with other priorities in the company.

Costs have to be incurred in the short term whilst the benefits can take years and often can be difficult to associate with the measures taken. In particular SMEs have difficulties in investing the needed amount of capital in greening their supply chain.

3.6.2 Existing policy

We have not been able to identify any policies that specifically support the use of GSCM. However, one source of inspiration can be found in Forum for the Future which is a British non-profit organization with a mission to promote sustainable development. It runs partnerships with more than 90 organizations across business and the public sector to incorporate the principles of sustainable development. The Sustainable Business Model

Group is a specialist network for partners that work with sustainable business models. It

connects global pioneers from across different sectors that learn from each other, have

access to a growing body of knowledge, and can shape the Forum’s work in this area30_.

3.7 Take back management

Take back management extends the producers responsibility of waste management through take back mechanisms of the downstream use of the product. This includes manufacturers, retailers, consumers and recyclers. A variety of companies have developed cost-effective ways to recover products from their distributors and customers. By working with product designers and other functions, supply chain managers can establish systems that enable them to recover these assets and reduce manufacturing costs.

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3.7.1 Barriers

Companies engaging in take back systems have to consider how the last part of the value chain affects the first part of it – materials taken back have to be included in production in one way or another - either in their own production or in another company’s production. A main barrier when working with take back management, is how to transport the used products from the customers back to either the company that manufactured the product, or to another company that can use the discarded product in their manufacturing processes. Geography plays an important role. It might not necessarily make much sense to send a discarded product used in Europe back to the manufacturer in China. Another barrier take back management poses, is how to design the product so it can be taken back and reused. It also requires thinking through how recycled materials can be used to develop new products. Once the design of a product changes, it very often affects the manufacturing systems of the company, requiring new machinery and new systems to be put in place.

Getting suppliers on board often poses a great barrier since reusing materials require the company to know what the materials consist of in order to determine ways to reuse the materials. Some suppliers can be reluctant to share information on what their materials contain.

There are also accounting barriers for take back management. 3.7.2 Existing policies

We identified an EU directive that seeks to promote the use of the TBM model. It is described briefly below.

Waste Electrical and Electronic Equipment, EU

EU legislation restricting the use of hazardous substances in electrical and electronic

Case 6: Desso

desso is a dutch manufacturer of carpets, carpet tiles and artificial grass. the company offers to take back customers’ old carpets – ones made by themselves as well as those made by competitors. based on the technology developed in desso’s take backtM programme, they can recycle and recover raw materials from used carpets and reuse them for making new ones. the yarn is separated from the carpets’ backing and is used to produce new yarn, while the backing of the carpets are sold as input to the road and roofing industry. as a result, 60% of desso’s carpet tiles are made from 100% recycled yarn. this has lead to an increase in market share of 8 percentage points while company profitability has

Green Business Model Innovation - Policy report

Green Business Model Innovation

Green Business Model Innovation

Project participants

Contents

Executive Summary

Policies for Green Business Model Innovation

Policy recommendations to promote GBMI in the Nordic

region

Policy recommendations to promote incentive models

Policy recommendations to promote life cycle models

Implementing policies for green business model

innovation

Preface

1. Introduction

1.1 Aim and focus of the policy report

1.2 How to read the report

2. Methodology

2.1 Delimitation

2.2 Conceptualising Green Business Model Innovation

3. Policies for Green Business

Model Innovation

3.1 Policies for specific green business models

3.2 Functional sales

3.3 Energy Saving Companies (ESCO)

3.4 Chemical Management Services (CMS)

3.5 Design, Build, Finance, Operate (DBFO)

3.6 Green Supply Chain Management (GSCM)

3.7 Take back management